Using Residential Delivery Indicators (RDI)

The Residential Delivery Indicator (RDI) is a data point used to distinguish whether a specific address is classified as residential or commercial according to the United States Postal Service (USPS). This classification is critical for businesses that need to optimize shipping costs, determine service eligibility, or conduct market segmentation. RDI data is primarily derived from USPS delivery records, making it a reliable and widely adopted standard in the U.S. address validation industry. Typically, RDI is used alongside other address validation tools to ensure accurate address classification and optimal logistics planning.

How RDI is Used

The Residential Delivery Indicator serves a variety of business needs, making it a versatile tool in address data management. Here are the primary categories of use cases:

1. Shipping Cost Optimization and Customer Experience: For companies involved in logistics or e-commerce, the commercial-residential classification is critical for shipping purposes. Shipping carriers often apply surcharges to residential addresses due to the additional resources required for deliveries to homes versus businesses. By using RDI, companies can identify residential addresses upfront and select the most effective shipping method or carrier. This enables businesses to optimize costs and avoid unexpected surcharges, ultimately improving customer experience by ensuring an accurate shipping rate is calculated and communicated at the time of purchase.
2. Marketing Segmentation: RDI helps companies refine their marketing segmentation strategies by providing insights into the type of address. For instance, companies targeting consumers might prioritize residential addresses, whereas those in the B2B space would focus on commercial addresses. This segmentation capability allows for more targeted direct mail campaigns and improves the relevance of marketing messages based on the recipient’s address type.
3. Service Area Determination: RDI is also essential for Service Area Determination. Companies offering services such as utility provisioning, internet plans, or home-specific services need to know if an address is residential or commercial to determine eligibility and the type of service offered. For example, an ISP may have separate plans for residential and commercial customers, or a utility provider might offer different rates based on address type. With RDI, these companies can ensure the right product or service is being offered to the appropriate segment.
4. Risk Assessment and Fraud Prevention: RDI can also play a role in Risk Assessment and Fraud Prevention. By analyzing discrepancies between shipping and billing addresses, companies can identify potential red flags for fraud. For example, a mismatch in address type for high-value orders may indicate suspicious activity. This helps in validating legitimate transactions and flagging potentially fraudulent ones, thereby reducing financial risks and ensuring better compliance.

Where to find RDI processing

If you are using a comprehensive address verification service, there’s a good chance that the capability to identify residential and commercial addresses is already part of your data package. However, it is not always labeled as “RDI,” and it might be integrated under broader validation or segmentation tools.

About RDI and Firstlogic

If your current address solution does not support RDI, consider leveraging our CASS-certified Address IQ solution to gain access to accurate residential and commercial address classification. One of the key advantages of our solution is its use of authoritative USPS data, which ensures higher accuracy compared to commercial providers that rely on zoning or geographical data alone. With Address IQ, you can optimize shipping, enhance marketing efforts, and ensure accurate address data, all while minimizing risks. Our licensing model allows for processing of unlimited records, making it a natural fit for large-volume processors. Contact us today to learn more about how Address IQ can support your business needs.